iAnthus Stock: Why This is an One-Time Buying Opportunity for Massive Gains

ITHUF Stock: Why This Pot Play is Too Cheap to Ignore

Pot stocks have been under pressure after starting the year on a high note. The Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ.TO) has corrected 23% over the past three months, easily underperforming the one-percent decline in the S&P 500 and 1.61% drop in the Nasdaq.

After the initial excitement in October 2018, when Canada became the first G7 country to legalize recreational marijuana, the market is now looking for evidence pot companies are growing instead of riding the expectations.

You can call this a must prove moment for pot companies. The reality is many of the smaller pot plays will either fold or be swallow up by the bigger players such as Canopy Growth Corp (NYSE:CGC), Cronos Group Inc (NASDAQ:CRON), Aphria Inc (NYSE:APHA), and Tilray Inc (NASDAQ:TLRY).

But while the sector risk is high, there is always room for smaller pot stocks, as long as you are using risk capital. In other words, losing 50% or more wouldn’t be devastating to your portfolio.

A small-cap pot play on the U.S. market with intriguing potential is iAnthus Capital Holdings Inc (OTC:ITHUF). iAnthus stock traded at a 52-week low of $2.34 on August 15, down a whopping 40% over the past three months and well off from its range high of $7.27.

Chart courtesy of StockCharts.com

At the distressed price, ITHUF stock is worth a look for aggressive traders searching for a possible bounce over the next year.

iAnthus operates in 11 states. The company is expanding its infrastructure and currently has about 700,000 square feet of cultivation and processing capacity in Florida, Massachusetts, Vermont, New York, Arizona, and Nevada.

Why the Growth Metrics Support My Bull Case

Like many pot companies, iAnthus Capital Holdings Inc has a relatively limited operating history, and much of it is immaterial as far as the amount.

But the key is the estimated growth going forward, especially as more states approve recreational pot, or at least decriminalize possession of small amounts.

(Source: “iAnthus Capital Holdings,” MarketWatch, last accessed August 15, 2019.)

iAnthus is expected to ramp up revenues to a staggering $174.11 million and as high as $236.67 million in 2019. This would be impressive if the numbers come close. (Source: “iAnthus Capital Holdings, Inc. (ITHUF),” Yahoo! Finance, last accessed August 15, 2019.)

Along the way, ITHUF is losing money, which is not a surprise given the high CapEx required to build infrastructure.

(Source: MarketWatch, op cit.)

But the expected surge in revenues is predicted to see iAnthus Capital Holdings Inc report adjusted profits of $0.06 per diluted share this year. There is a high estimate of $0.23 per diluted share, which equates to an attractive 11 times earnings for ITHUF stock. (Source: Yahoo! Finance, op cit.)

Analyst Take

The selloff in iAnthus Capital Holdings Inc to a 52-week low makes for a good risk/reward, especially with the expectations for this year.

Trading at just over one times 2019 sales, ITHUF stock is worth a look, especially if you have some loose change lying around.